13 May 2021
John Wood Group PLC ('Company')
Annual General Meeting Statement
“In Q1 we are seeing continued momentum in order book, which is up 9% year-to-date. While the year has started slower than anticipated, margins have remained relatively robust, benefitting from efficiency initiatives and improved project execution largely offsetting the impact of lower activity. Our outlook for 2021 is unchanged: increased Consulting activity and strength in Operations, supported by an improving order book, are expected to partly offset lower Projects activity. The successful delivery of our Future Fit programme and an increased proportion of higher margin Consulting revenues will deliver a full year margin improvement.”-Robin Watson, Chief Executive
- Order book of $7.1bn, up c9% on 31 December 2020 with good growth in Consultancy and Operations
- Q1 2021 slower than anticipated but with improving momentum: relatively robust activity in Consulting and lower activity in Projects and Operations
- Q1 EBITDA down on same period last year but margins relatively robust: high utilisation, successful delivery of Future Fit programme efficiencies and improving project execution largely offsetting lower activity
- 2021 Outlook unchanged. Lower activity anticipated driven by Projects, offset in part by strength in Consulting and Operations activity. EBITDA margin to grow modestly
- Strong progress on ESG targets: 8% reduction in carbon emissions and over 30% female representation in senior leadership roles
Trading performance and outlook: margin improvement initiatives offsetting lower activity
In a challenging market affected by Covid-19, the first quarter was slower than anticipated but with improving momentum, and was down on Q1 2020 which was largely unaffected by the pandemic. Compared to Q1 2020 relatively robust activity in Consulting, driven by strength in the built environment, was partly offset by lower activity in Projects as large EPC contracts roll off, and lower activity in Operations, particularly in conventional energy due to the impacts of Covid-19 and oil price volatility.
On a like for like basis, excluding the impact of disposals completed in Q1 2020, EBITDA margins have remained relatively robust. Our focus on maintaining high utilisation, the successful delivery of efficiencies from the optimisation of our operating model under our Future Fit programme and improving project execution are largely offsetting the impact of lower activity.
Our overall outlook for 2021 of lower activity remains unchanged. We expect increased activity in Consulting driven by continued strength in built environment activity. Lower activity in Projects will be driven by larger contracts in process & chemicals rolling off and new awards in process & chemicals and conventional energy being limited to smaller, early stage scopes, offset in part by resilience in renewables. Strength in Operations will be driven by a recovery in demand in conventional energy and growth in process & chemicals, which is supported by improving momentum in order book.
EBITDA margin is expected to grow modestly with the improvement driven by maintaining high utilisation, improved project execution, operational and efficiency improvements including $40m of efficiency savings from our Future Fit programme, and our business mix orientating more towards higher margin Consulting.
Order book progression: continued momentum and breadth in new awards
Improving momentum in order book has continued in Q1 2021. Order book of $7.1bn is up c9% on December 2020 with good growth in both Consulting and Operations.
The breadth of recent awards reflect our strategic positioning for the energy transition and drive for sustainable infrastructure. These include a contract for engineering, procurement and construction (EPC) solutions for a hydrothermal recycling facility, an owner’s engineer scope for Europe’s largest single-site onshore windfarm and a global framework agreement to support the delivery of large-scale green hydrogen production plants. We also continue to build on our strong customer relationships in conventional energy and we were recently awarded a five-year integrated facilities services agreement with TAQA in the North Sea.
Delivering on our ESG targets
At the start of 2021 we established a set of measurable targets to ensure our accountability for environmental, social and governance matters and maintain our position as leaders in our field.
We are already making good progress towards these targets, in particular:
- In 2020, we delivered an 8% reduction in our scope 1 and 2 carbon emissions, towards our goal of a 40% reduction by 2030. We are also focusing on the adoption of a target for a reduction in scope 3 emissions which we expect to roll out in the second half of 2021
- We currently have over 30% of female representation in senior leadership roles compared to our target of 40% by 2030. The Board is also representative of our focus on ensuring diversity of thought with 40% represented by females and with a wide range of experience and backgrounds
As previously announced, Mary Shafer-Malicki will resign as non-executive director following today’s AGM. Mary has been a non-executive director of Wood since 1 June 2012 and her resignation is in line with the 2018 UK Corporate Governance Code requirements on independent director tenure.
Brenda Reichelderfer and Susan Steele joined the Board as non-executive directors with effect from 31 March 2021. Brenda is a skilled engineer and business leader and brings considerable global engineering and operational experience from a range of industries. Susan has extensive engineering and construction industry, programme management and supply chain performance experience with global expertise across a range of end markets.
Our next update, on 24 June 2021 will be a pre-close trading update for the six months ended 30 June 2021.
- Company compiled, publicly available consensus comprises 8 analysts who have published estimates since our Full Year Results for the year ended 31 December 2020 issued on 16 March 2021. Consensus includes: Barclays, Bank of America Merrill Lynch, Berenberg, UBS, Citigroup, Kepler Cheuvreux, HSBC and Jefferies.
Consensus 2021 revenue is $7.1bn (range: $6.4bn to $7.4bn), consensus adjusted EBITDA is $610m (range: $554m-$634m), consensus operating profit (pre-exceptional items) is $207m (Range: $141m-$233m) and consensus AEPS is 24.1c (Range: 11.1c-31.9c).
Notification authorised by:
Martin J McIntyre
Group General Counsel and Company Secretary
Note to Editors:
Wood is a global leader in consulting and engineering across energy and the built environment, helping to unlock solutions to some of the world’s most critical challenges. We provide consulting, projects and operations solutions in more than 60 countries, employing around 40,000 people.
Ellie Dixon – Acting President Investor Relations 01224 851 369
Citigate Dewe Rogerson
Kevin Smith 020 7638 9571